[DRAFT] Fairness in Currency Transactions

[Pompadoodle]

After some discussion, Harpoonman Henrik and myself have decided to collaborate on a new and improved version of 'Fairness in Currency Exchange'. The idea will be to support free trade and protect travellers from exploitation without placing unwarranted limits on government policy, or giving currency speculators a free ride.

I'll be posting my own ideas on the subject within the next day or so.

[Harpoon Man Henrik]

Current Text of the Resolution:

The World Assembly,

RECOGNIZING the importance of international commerce and industry,

DETERMINED to promote both free and fair opportunities for international trade,

NOTING that the most WA member nations have their own separate currencies, and that the effective values at which these can be exchanged for each other can vary from market to market as well as over time,

CONCERNED that inefficiencies involved in this exchange process, including a lack of up-to-date knowledge about effective values, may impede the natural flow of trade between nations,

ELUCIDATING that as exchanging currency that comes from any one nation for currency that comes from any other nation is a form of international trade this business does not count as a purely ‘domestic’ form of economic activity, and that this business is therefore not covered by any limitations that the World Assembly may have accepted on its right to intervene in member nations’ domestic taxation policies;


1. DECLARES that the governments of WA member nations:
a) May not impose any special taxation upon the process of exchanging currency from any one nation for currency that comes from any other nation, nor permit any sub-national government or other organisation within their jurisdictions to do so either, although any general taxes that are applicable to all other forms of commercial activity within those national or sub-national jurisdictions may also be imposed upon this business;
b) Have the right to decide for themselves whether the currency exchange business within their own territories shall be handled by government agencies, by commercial enterprises, or by both of those possibilities;
c) May not allow any commercial enterprises to have or be party to legally-protected monopolies or oligopolies over this currency-exchanging business within their jurisdictions;
d) May not allow any government agencies to have legally-protected monopolies or oligopolies over this currency-exchanging business within their jurisdictions unless those agencies conduct this business purely on a non-profit-making basis and do not charge fees for doing so that exceed the levels necessary to cover their reasonable expenses;
e) May not permit any bodies that are carrying out currency-exchanging operations within their jurisdictions to practice favouritism or unfair discrimination in this business;

2. CREATES the World Currency Exchange Commission (or WCEC) to monitor exchange rates between the currencies of World Assembly members, and declares that:
a) WCEC must collect accurate information about international exchange rates, on as frequent a basis as is reasonably possible, and must make this information freely available to all governments, businesses, and individuals within WA member nations;
b) All governments, businesses, and individuals within WA member nations must cooperate with WCEC in the gathering of this data, and must make the information that WCEC provides to them freely available to all interested parties;
c) WCEC has the power of binding arbitration in any appeals about the application of this resolution’s terms within particular nations that may be brought before it, including the power to order the payment of appropriate compensation to any people who have been adversely affected by abuses of these rules, and there is a general right of appeal from all member nations’ own legal systems to WCEC for this purpose.

ELUCIDATING... clause wasn't my idea, and I will probably modify or strike it, as the new draft should be much more friendly to national sovereignty.

1a has to go entirely, though I might replace with something like "STRONGLY ENCOURAGES member states to limit taxation on exchanges to levels required to combat currency speculation or destabilization".

1b should be fine, and was intended to support national sovereignty.

1c, 1d are a bit trickier. I wanted to make it so that people wouldn't be overcharged for exchanges due to lack of competition. I don't know how to do that without compromising NatSov, either by requiring competition as above or by requiring audits by a WA committee, which would probably be worse. This may be another place for a "STRONGLY ENCOURAGES..." style clause.

1e seems like it should stay, and might be enough to cover the loss of 1c and 1d.

2a, 2b were the original focus of my very early drafts, and the proposal really wouldn't do much without them in some form.

2c, on the other hand, was a much later addition, and I'm not sure that it's needed.

[Pompadoodle]

Okay, now that the saga of the Nazi condemnation repeal is over (for now), I'll be able to spend some time on this.

Lets begin by considering what we want the proposal to do. Worrying about the precise wording can come later. It seems to me that there are (or should be) 3 objectives:

1. To safeguard international travellers and businesses conducting international transactions from being ripped off. Specifically, we need to ensure that foreigners and foreign businesses are not forced to pay any sort of surcharge on currency transactions purely because of their status as foreign individuals or businesses. There should be a level playing field, as it were.

For example: It should be illegal for a citizen of Harpoon Man Henrik living in Pompadoodle to be forced to use a disadvantageous exchange rate if s/he wished to convert worms (Pompadoodle currency) into Chokistan dollars. The citizen of HMH should pay exactly the same as a Pompadoodle citizen would.

2. The corollary of this is that currency exchange rates need to be transparent- otherwise (1) is unenforcable. Thus all organizations which conduct currency exchanges should have to publish their current rates, terms and conditions publically.

3. Finally, there should be an international body entrusted with the collation of currency-related information. I'd suggest that the same body should also arbitrate currency-related disputes with the agreement of the parties involved. The arbitration would be binding if and only if such parties had agreed that it would be so.

So...I'd suggest that section 1 of the original needs to be substantially re-written. Section 2 clause (a) and (b) are excellent, and don't need any changes. 2(c) also needs re-writing.

Comments appreciated.

[Harpoon Man Henrik]

Objective 1: Fairness

REQUIRES that member states aid in the publication of accurate exchange rates for their national currencies as frequently as practical

REQUIRES that member states apply any taxes or fees equally to all currency exchanges occurring within their jurisdictions

ENCOURAGES states to maintain any taxes or fees applied to currency exchanges at a level no higher than what is needed to combat speculation in or devaluation of their currency

FURTHER REQUIRES that member states ensure that currency conversion services are reasonably available for foreign visitors

(That should at least take care of access. I'm not sure how to deal with commercial enterprises charging high fees for conversions - ideas are most certainly welcome. Also, any of these clauses are rough drafts at this point, so suggest modifications where you think they're needed.)

Objective 2: Transparency

CREATES the [committee] to collect publicly available information regarding currency exchange rates within WA member states

MANDATES the full release and publication of this information to all relevant parties, and to any individual or organization upon request,

(Anything I'm missing?)

Objective 3: Conflict Resolution

ALLOWS mediation or arbitration by [committee] for conflict resolution involving currency exchanges between two or more individuals, organizations, or governments subject to the following restrictions:

1. All parties must agree to the procedure, and must determine whether the decision of [committee] will be binding or advisory
2. The parties must not fall within the same national jurisdiction

(This probably needs a good deal of work. I included the bit about not being in the same jurisdiction because I think that might infringe on national sovereignty, but I could do without that.)

Objective 4: National Sovereignty

NOTES that this legislation does not restrict national policies affecting the value of their currencies except where explicitly stated

FURTHER NOTES that no government is required to divulge information other than up-to-date and accurate exchange data for the purposes of this legislation

(Does that cover me well enough, or should there be more?)

[Pompadoodle]

I think that the most difficult bit is probably objective 1 (fairness), so I'm going to concentrate on that in this post.

Your working version and comments:

Objective 1: Fairness

i) REQUIRES that member states aid in the publication of accurate exchange rates for their national currencies as frequently as practical

ii) REQUIRES that member states apply any taxes or fees equally to all currency exchanges occurring within their jurisdictions

iii) ENCOURAGES states to maintain any taxes or fees applied to currency exchanges at a level no higher than what is needed to combat speculation in or devaluation of their currency

iv) FURTHER REQUIRES that member states ensure that currency conversion services are reasonably available for foreign visitors

(That should at least take care of access. I'm not sure how to deal with commercial enterprises charging high fees for conversions - ideas are most certainly welcome. Also, any of these clauses are rough drafts at this point, so suggest modifications where you think they're needed.)

Numbering added.

Your (iii) and (iv) look fine as is. Its the earlier sections that seem tricky, especially since, as you say, we need to (somehow) integrate commercial transactions into the resolution.

Okay, heres my first attempt:

i) REQUIRES that all agencies, both commercial and state-controlled, involved in the process of foreign currency exchange should make their terms and conditions for currency exchange publically available.

ii) REQUIRES that all member states of the WA should set a regular daily time at which currency trading agencies in their jurisdiction should publically report the current exchange rate for all foreign currencies that they have exchanged within the previous 24 hours. It is further reqired that all WA states should maintain a permanent and publically available record of such exchange rates.

This covers your (i), but is significantly tighter.

iii) REQUIRES that member states should ensure that the exchange rates available to foreign individuals, states and commercial enterprises are the same as those available to domestic individuals, states and enterprises. No tax, quota or other trade restraint shall be imposed by members states which shall result in either domestic or foreign enterprises receiving a more favourable rate of exchange. All member states shall require currency exchanging agencies within their jurisdiction to give the same rate of exchange to domestic and foreign clients, without discrimination or prejudice.

This covers your (ii) and expands it to cover commercial agencies.

Your (iii) and (iv) become (iv) and (v):

iv) ENCOURAGES states to maintain any taxes or fees applied to currency exchanges at a level no higher than what is needed to combat speculation in or devaluation of their currency

v) FURTHER REQUIRES that member states ensure that currency conversion services are reasonably available for foreign visitors

Comments encouraged.

[Harpoon Man Henrik]

Excellent. The only problems I see are:

1. Nations should still retain the right to block or restrict currency trade with other nations as an act of international diplomacy (or war). I saw this argument come up a lot. Also,

2. putting in the 24 hour clause is going to set off a storm of criticism when it hits the WA floor. It's a nightmare trying to write legislation that works for nomadic Bronze Age tribes, sentient bears, and space empires. I can just see the arguments: "But my country is a Victorian steampunk setting, and it would take more than a day for that information to spread throughout the land" or "In my spacefaring nation of pure awesomeness, the economy would grind to a halt if the rate were updated only once every day". If we can do without specific numbers, we're better off, even if the language is a bit weaker. It's just one of those strange things about GA culture.

Thoughts?

[Walabamba]

I like it, I would definetely vote for it! Have you thought about posting it in the NS forums or are you going to keep editing it here?

[Pompadoodle]

@harpoon Man:

Yeah, I agree with you on both counts. So how about we change (ii) to:

ii) REQUIRES that all member states of the WA should set a regular time at which currency trading agencies in their jurisdiction should publically report the current exchange rate for all foreign currencies that they have exchanged since they last reported their exchange rates. This should occur as regularly as is feasible given the circumstances of the nation. However, in no case will the WA require that such reporting should be more frequent than once per 24 hours. It is further reqired that all WA states should maintain a permanent and publically available record of such exchange rates.

And add a (vi):

vi) In the event of war, clause (iii) shall be suspended with regard to currency exchanges occurring between parties falling under the jurisdiction of belligerent governments on opposite sides of the conflict. Furthermore, it is recognized that in wartime extraordinary measures of currency control may be required. In such cases, the WCEC will consider favourably any request from a member government for exemption from such clauses of this treaty as may be necessary for the prosecution of the war. Such requests must be made formally, and clear justification must be given for the exemptions.

Whew!

This is like a job I used to have- I was working for a charity, and it turned out that they didn't have anywhere near the number of policies and procedures that they should've. I ended up writing 40-odd policies in the space of a couple of months. I didn't mind tbh, although I have to say that this is much more fun.

@walambama:

I think that the idea is that we get something more-or-less workable sorted out here, and only then take it to the NS forums.

@ Harpoon Man (again):

Would there be any point in my sending a puppet over to your region? Then we could simultaneously post our ideas in Antarctic Oasis and here, and get feedback from folk in both regions.

[Harpoon Man Henrik]

I'll post my comments and suggestions, and in the next post, put my revised suggestions for the entire proposal. Otherwise it will be unreadable before long. ;D

Aug 24, 2010 19:12:05 GMT -5 Pompadoodle said:

@harpoon Man:

Yeah, I agree with you on both counts. So how about we change (ii) to:

ii) REQUIRES that all member states of the WA should set a regular time at which currency trading agencies in their jurisdiction should publically report the current exchange rate for all foreign currencies that they have exchanged since they last reported their exchange rates. This should occur as regularly as is feasible given the circumstances of the nation. However, in no case will the WA require that such reporting should be more frequent than once per 24 hours. It is further reqired that all WA states should maintain a permanent and publically available record of such exchange rates.

I think that needs to be broken up a bit. Was there a problem with:

"REQUIRES that member states aid in the publication of accurate exchange rates for their national currencies as frequently as practical"

for the first half? I admit that some nations will try to twist the definition of "practical", but then, some nations will try to twist the definition of almost any word in a proposal. I'm in a region *filled* with such people (by which I mean Antarctic Oasis).

Also, some nations may not take direct steps to control their currency's value, hence the phrasing "aid in the publication..."

On a more philosophical note, should the collection of historic values fall on WA member states or WCEC? I'd think that [committee] would be a better choice, as nations can enter and leave the WA at will, while WCEC will be part of the WA so long as this legislation is in effect. Either way, I think that ii) needs to be split into two sub-clauses.

And add a (vi):

vi) In the event of war, clause (iii) shall be suspended with regard to currency exchanges occurring between parties falling under the jurisdiction of belligerent governments on opposite sides of the conflict. Furthermore, it is recognized that in wartime extraordinary measures of currency control may be required. In such cases, the WCEC will consider favourably any request from a member government for exemption from such clauses of this treaty as may be necessary for the prosecution of the war. Such requests must be made formally, and clear justification must be given for the exemptions.

I think that this is going to make the NatSov people howl, as they will read it to mean that, even during open warfare, they have to ask (horrors!) a WA committee for permission to adjust their trade policies. Add in diplomatic crises short of warfare, such as recalling ambassadors, trade disputes, border disputes, "neutral" nations clearly favoring one side in a war, and so on, giving WCEC so much authority is going to drive up the "against" votes - which is too bad, because I would personally like to see something like this make it into the final proposal. I just think that it will be too controversial.

Whew!

This is like a job I used to have- I was working for a charity, and it turned out that they didn't have anywhere near the number of policies and procedures that they should've. I ended up writing 40-odd policies in the space of a couple of months. I didn't mind tbh, although I have to say that this is much more fun.

I think that you should spend more time in the WA forums, assuming that you're not already overcommitted with RL stuff, region defense, XKI non-defense stuff, and anything else going on. You clearly have good ideas, and the conventions aren't too strange or difficult to pick up.

@ Harpoon Man (again):

Would there be any point in my sending a puppet over to your region? Then we could simultaneously post our ideas in Antarctic Oasis and here, and get feedback from folk in both regions.

I can TG Kenny to see if he'll approve an account for you. Most likely, he'll allow access to the public directories, which I believe includes the WA discussion forum. Feel free to move a non-WA nation into AO as well and post on the RMB.

[Harpoon Man Henrik]

Aug 24, 2010 18:40:51 GMT -5 Walabamba said:

I like it, I would definetely vote for it! Have you thought about posting it in the NS forums or are you going to keep editing it here?

I'd like to modify it a bit more until I have a "working draft" for the WA forums. I think it's a good idea to let the failure of the past version fade a bit from memory before I put up a new draft.

[Harpoon Man Henrik]

Oh, Light. I promised a new draft, didn't I? Apologies for the triple post, but I'd drown in text otherwise. 2239 characters with spaces, so it should be doable as long as not too much more is added (I still need to include the preambulatory clauses). Comments?

Fairness in Currency Exchange v3.X - no preamble

1 - Transparency

i) Member states must make publicly available accurate exchange rates for their national currencies as frequently as practical

ii) All agencies, both commercial and state-controlled, involved in the process of foreign currency exchange should make their terms and conditions for currency exchange publicly available.

2 - Access and Standardization

i) Member states must ensure that the exchange rates available to foreign individuals, states and commercial enterprises are the same as those available to domestic individuals, states and enterprises

ii) All member states shall require currency exchanging agencies within their jurisdiction to give the same rate of exchange to domestic and foreign clients, without discrimination or prejudice.

iii) Any tax, quota or other economic policy may not result in either domestic or foreign enterprises receiving a more favorable rate of exchange

iv) Member states are encouraged to maintain any taxes or fees applied to currency exchanges at a level no higher than what is needed to combat speculation in or devaluation of their currency

v) Member states must ensure that currency conversion services are reasonably available for foreign visitors

3 - Currency Exchange Commission (CEC)

i) Creates the CEC to collect information published or released pursuant to "Clause 1 - Transparency" and to maintain a publicly accessible archive of this information

ii) Directs the CEC to assist member nations, on a voluntary basis, to modernize or improve the efficiency of currency exchanges within their jurisdictions

4 - Resolution of Conflicts

i) This law permits mediation or arbitration by CEC for conflict resolution involving currency exchanges between two or more individuals, organizations, or governments subject to the following restrictions:

ii) All parties must agree to the procedure, and must determine whether the decision of [committee] will be binding or advisory

iii) The parties must not fall within the same national jurisdiction

4 - Sovereign Immunities

i) This law does not restrict the right of member states to initiate or suspend trade in foreign currencies

ii) Member states are not required to disclose any information on economic policy outside of currency exchange valuations

[Pompadoodle]

Excellent...the new version of the resolution is shaping up well.

I'd really like to make 1(i) and 1(ii) a bit stronger. I think that they'd be too easy to evade as is. Having said that, I concur that my last attempt at a re-write was too strong and too specific. So, heres my latest attempt:

1(i) REQUIRES that member states collect data from all currency exchanging agencies within their jurisdiction at regular intervals, and as frequently as is practicable. Such data will include current exchange values for foreign currencies, and terms and conditions offered.

1(ii) REQUIRES that all agencies, both commercial and state-controlled, involved in the process of foreign currency exchange should make their terms, conditions and current rates for currency exchange publicly available.

Also, 2(i) and 2(ii) as written pretty much duplicate each other. Really, one should refer to rates and the other to terms and conditions. I would suggest:

2(i) Member states must ensure that the exchange rates available to foreign individuals, states and commercial enterprises are the same as those available to domestic individuals, states and enterprises

2(ii) All member states shall require currency exchanging agencies within their jurisdiction to give the same terms and conditions to domestic and foreign clients, without discrimination or prejudice.

Other than the above, I'd say its fine.

Note that I'm assuming that the data in the transparency clauses will be initially collected by the member states and then passed on the WCEC. I think that works better than the WCEC collecting directly.

Partly thats because the national governments would need a lot of that data anyway- so no need to collect it twice. And partly because the resolution will be easier to get passed that way- no WA bureaucrats inspecting the books of every money-changer in every member state.

[Harpoon Man Henrik]

Good on all counts. I will update the draft accordingly.

I also agree that WCEC should collect information given from member nations for reasons of efficiency as well as the reasons you mentioned.

I think that this will be ready for a NS posting soon.

[Pompadoodle]

Great.

We've reached a draft version that we can both agree on. I've just re-read it and I can't see any further problems- it looks sound.

How about posting it in AO for comments? You guys over there seem to be pretty hot on all things WA-related.

[Harpoon Man Henrik]

Sure. I'll try to get the updated draft there by the end of the day. Also, I think that I will post it to UNOG to get maximum input (and maybe kick up some activity in their forums too).

[Harpoon Man Henrik]

Just a quick post to let everybody involved know that I haven't forgotten about this. I just started a new graduate program this week, and classes officially started today, so things should settle into a reasonable routine soon.